With every mobile home park acquisition comes a survey. And with those surveys there are often issues to address. In this Mobile Home Park Mastery podcast we’re going to review the most common survey problems and what the typical methods are to fix them.
Episode 409: How To Fix Common Survey Issues Transcript
One of the scariest moments in any mobile home park acquisition is when you receive the survey in from the surveyor. Because for the first time, you're going to see what may be some hidden flaws that could potentially derail the transaction. But many times, these problems, which you initially think are so grandiose they cannot be occurred, actually have been solved in the past, and there's kind of a standard playbook to correct them. This is Frank Rolfe of the Mobile Home Park Mastery Podcast. We're going to talk all about survey problems, the normal problems that do arise, and some ways to mitigate those. So let's first identify why there are shocks in the survey, and that's simply because mom and pop traditionally have owned the thing, the mobile home park, for decades. And there hasn't been a survey done in a long, long time. And as a result, in all those years that mom and pop owned the property, things may have happened. They may have not placed the homes in the right spots. They may have allowed certain easements and things to come onto the property. They may have never checked out what they bought in the first place when they built the park.
You have to remember that many moms and pops viewed the mobile home park simply as a side hustle to their regular day job. Although parks are very valuable today, back when they built these in the 50s and the 60s and even the 70s, they weren't. And it was just a way for a postman or somebody else with a normal day job to have a little side money coming in the door, typically on a piece of land that they owned as a family farm. So here are some of the things that you will find in many, many mobile home park surveys and how you can kind of correct those. The first one are easements crossing the property. Now, if you're lucky, when you get the survey, there won't be any. But sometimes you'll see something which resembles a road crossing right through the middle of the property. And that can be a complete deal killer. Now, that's one option. You could say, I'm not going to buy this deal. Look, there's an easement for a road going right through it diagonally. But that's not typically the correct way to proceed. Because often if you go to whoever has the easement, which has never been built, you can get those easements vacated.
Let's assume that a city was going to build a road back in the 1940s. And so they went ahead and have an easement going through the property to build that conduit for folks to drive their cars from point A to point B right through your mobile home park. But over the years, they built roads elsewhere. And now they don't need that road anymore. And you can go back to the city and say, hey, you've got this easement for this road. And you put it on the books back in 1946. And it's never been built. It's about 80 years later. Are you still going to build the road? And oftentimes they'll say, oh, no. No, we're not building that road. Yeah, we'll go ahead and agree to go ahead and vacate that easement. Because a lot of times the easements back before parks were built, some of those things are a half a century or more old. If they were going to put them in, they already did. And if they're not going to put them in, you'll find many cities are open to the idea simply of acknowledging formally they're not going to do that.
So it's not often a deal killer when you do have some of these easements crossing properties that are unbuilt. I'm not talking about things that actually are built, but things that never were built. Those easements on the books, you can often go and get those corrected. Another common problem you have on surveys with mobile home parks, and this one is really common, are homes that are overhanging property lines. Now, what happened? How can the mobile home front half be on your property and a portion of the back, however, hanging into the neighbor? Normally what happened was the mom and pop didn't want to spend the money to actually put survey stakes in on their own property. So they just kind of guessed where the property boundary was. They thought to themselves, well, I think the property boundary is a straight line. If I stand at this tree and look down to that other tree, I kind of think that's my boundary, but they're wrong. Their boundary is not even a straight line. So what happens is, is they're parking that mobile home on that spot back in 1968. It's sticking five feet into the neighbor. And the next time after that, it's sticking 10 feet into the neighbor. And so on and so forth.
Often they'll have many of the streets perfect, nothing overhanging, but then there's one street where almost every home is hanging into the neighbor. And it's because of sheer ignorance. It wasn't malicious. They didn't think, oh yeah, I'm going to quietly push this home into the neighbor and hope I get away with it. No, they just didn't know where the boundaries were. And they didn't want to spend the money to find out. And now decades later, you're going to find out. And you can often find some of the homes are hanging onto the neighbor. So then what do you do? What's the playbook when the home is hanging onto the neighbor? Well, you have several angles of attack on that. In most states, you have a law called adverse possession. And what it means is if the person does not notify you that you are hanging over into their property, after a certain number of years, that right becomes permanent. And effectively now you own that property in that portion. So in many cases, if you've been hanging over into the neighbor, regardless of what state, typically if you're talking a half a century hanging over, there's probably some kind of law, something on the books that makes that a permanent possibility.
You also could go to the neighbor and say, hey, neighbor, I apparently am hanging into your property a little bit on some of these homes. Could I buy that portion of land that I'm hanging onto? Or could I rent the ability to hang over? And those may also work out for you. Now, some of the lenders, however, even if you go to the neighbor and say, hey, neighbor, I want to hang into you, that may cause them some degree of heartburn. It's going to depend probably on how many homes you have overhanging. If the entire park is overhanging into the neighbor, probably that deal cannot be financed. But that's not normally the case.
So when you have those issues
With homes hanging over, it doesn't mean the end of the movie. You can still potentially work that thing out. Now, there is one caution on that. You normally cannot fix it if you are overhanging onto county or federal or city property. There, you don't have the right of adverse possession. You can't get an agreement to overhang, and that can be a real problem.
Another issue that can sometimes happen in mobile home parks when you get the survey is you're missing a little tiny piece of your park.
Now, if the little piece you're missing might be down in the playground area, it might not be a big deal. But I've seen surveys in which the part that's missing could potentially be a four-by-four square right in the middle of your road. How's that even possible? Because mom and pop were playing it fast and loose when they built the mobile home park, and sometimes they didn't bother to acquire all the land. So they built the park, built the road, but it really wasn't their right to build as they did because they did not actually have ownership of all of the land. So what do you do? Same thing as when the home overhangs. You may have a claim through adverse possession. You might be able to go in and simply buy that little out parcel from the neighbor. We once had an issue, or I had an issue in my early career on a mobile home park where the mom and pop did not realize, but there was an entire section of the park, probably about a third of the park, that was on the neighbor's land.
Apparently when mom and pop built the park, they never bothered to do any surveying at all, and the neighbor never complained. We were able to get that solved by having an attorney go to the neighbor and say, look, neighbor, someday you're going to want to sell off your farm, and you don't want to have any title dispute with us. So let's just make it clean. Let's go ahead and get this all legally sorted out now.
So once again, a survey issue
Which looked impossible to solve ultimately was rendered whole. And then finally, and this is very, very common on many surveys, are mobile homes that are violating your own easements. You typically have in your mobile home park easements for such things as gas lines and power and even water and sewer, and sometimes homes are sitting on top of the easements. Once again, mom and pop weren't paying attention, or maybe they knew what they were doing, but a home wanted to come in that was a little bigger than they had planned for, and gosh darn it, they didn't want to lose the money, so they said, go ahead and put that thing on in there. Once again, not necessarily a deal killer, because often you can go to the utility and say, look, I'm overhanging you. What does it mean? What are the ramifications? It's not uncommon that the utility will give you an agreement, and in that agreement, if they ever have to replace or dig in that area, you have to remove the home while they're digging potentially and put it back. It doesn't sound very cheery, although the risk is probably extremely low that that would ever occur.
But in the diligence phase, you don't want to let that hide. You want to bring it out to the forefront, go and say, okay, I'm hanging into your easement, Mr. Powercat. I'm hanging into your easement, Mr. Gas Company. What does it all mean? Contrary to what most people think, it doesn't mean the deal is going to die necessarily, because often utility companies are fairly familiar with the concept of people who have encroachments into their easements, and the good news of mobile home parks is, since it's private property, often those easements are for your own use, so you can actually move the easement around. It's been done before. The bottom line is, when you get the survey, don't despair. If you open it up and there are things wrong, there are homes overhanging, homes in easements, maybe an easement running right through the property. If you want to quit, if you don't like the deal to begin with, sure, it's a good reason, easy to make you give it back. But in many cases, those survey problems can be properly rectified. You'll have to use some knowledge, some strategy, probably the use of an attorney, definitely to write up the solution.
But once again, like with all deals, if you work at it creatively with diligence and patience and perseverance, you can get the job done. This is Frank Rolfe, the Mobile Home Park Mastery Podcast. Hope you enjoyed this. Talk to you again soon.